New Report Finds Legalization of Mexican Immigrants Substantially Improves Status of U.S. Economy

WASHINGTON (By Daphne Eviatar, Washington Independent) November 5, 2009 ― A new report prepared for the Immigration Policy Center finds undocumented Mexican immigrants who gained legal status in the 1980s via the Immigration Reform and Control Act (IRCA) went on to earn substantial gains in their socioeconomic status.

The report suggests contrary to the idea legalizing immigrants will increase competition for scarce jobs in the U.S., legalization of many of the 11 million or so current undocumented immigrants would actually yield economic benefits, not only for the immigrants but for the U.S. economy as a whole.

Between 1990 and 2006, Mexican immigrants legalized under IRCA dramatically increased their education levels, reduced poverty rates and became more likely to buy their own homes. Real wages rose, many of them moved into managerial positions and the vast majority did not depend upon public assistance, the report finds.

"Economic Progress via Legalization" is one of three reports issued by the Immigration Policy Center today aimed at encouraging policymakers to pass comprehensive immigration reform legislation. The other two look at "Social and Economic Benefits of Legalization," and at who should be allowed to benefit from an “Earned Legalization” program.

This report adds weight to the contention that it is time for Congress and the Administration to change our current, ineffective immigration policies and enact comprehensive immigration reform. Moving immigrants into a legal status contributes to the U.S. economy. Providing legal status does not mean that the newly legalized would become dependent on the state for welfare and other public assistance. The data in this report suggest that newly legalized immigrants will become better educated, earn higher wages, heighten consumer participation, and not rush to sign up for the public dole once legalized.

What we learned from IRCA gives us a bird’s eye view into what we can expect to happen with a new legalization program. By examining three areas of concern: work, family, and community, we can see what economic and social benefits would be derived from a legalization program in 2010.

Legalization and Work

Legalization through IRCA did not turn people into workers; it regularized their status as workers. How do we know? Researchers examining records on legalization applicants kept by the Immigration and Naturalization Service (INS) found that the labor-force participation rate for men was an astonishing 90%, while for women it was between 70 and 92% — so in general most immigrants were already in the workforce.

Nearly two out of five people who legalized under IRCA were U.S. citizens by 2001.

Unfortunately some employers used workers’ lack of legal status to pay them less than U.S. workers. Numerous reports show that workers who applied for legalization under IRCA paid what we call a “wage penalty” for working without legal sanction. While estimates vary, my work suggests that undocumented workers earned 14% less than they would have if they had been legal worker in their very first U.S. jobs — and that “penalty” grew with time. Using different methodologies, data sets, and national origin groups, nearly all researchers agree: once legalized, men’s wages increased simply because they now had the legal right to work.

Their wages increased immediately because they were paid better for the skills they already had, and wages increased later as the men freely invested in acquiring new skills after legalization — knowing that it would pay off in increased future earnings. IRCA meant higher wages, improvement of workforce skills, and a level playing field for other workers. Legalization allowed them to seek new and better jobs, training, and education. The newly legalized registered in classes, retrained, and looked for new jobs in unprecedented numbers.

Women who were undocumented before IRCA had been subject to economic exploitation and the fear of deportation. More than two-out-of-five women who applied for legalization under IRCA had started their work lives in the United States as household servants or child-care workers. Although women didn’t gain as much as men from legalization, fewer of them were paid sub-minimum wages once they had legal status. Legalization meant higher wages for these women and a safer environment for the children for whom they cared.

A new legalization program would automatically transform more than one-in-twenty workers into recognized employees openly subject to labor laws. They would earn higher wages, spend more money in the United States, and pay regularly into the Social Security and tax systems.

Today’s undocumented residents are undoubtedly committed workers, too. Roughly 94% of undocumented men and 58% of undocumented women are in the labor force today.6 Since about 5.4% of the labor force in the United States in 2008 consisted of undocumented workers, a new legalization program would automatically transform more than one-in-twenty workers into recognized employees openly subject to labor laws. They would earn higher wages, spend more money in the United States, and pay regularly into the Social Security and tax systems.

Former Federal Reserve Chairman Alan Greenspan testified in the Senate in 2009 that “there is no doubt that unauthorized — that is, illegal immigration — has made a significant contribution to the growth of our economy.” Going further, he added, “Economists generally view the overall economic benefits of this workforce as significantly outweighing the costs.” But the benefits of undocumented immigration are skewed to those employers who undermine U.S. workers by taking advantage of undocumented workers. The costs are paid by law-abiding employers who are in unfair competition with employers who pay undocumented workers less than other workers, as well as those workers whose wages are suppressed by this practice. The federal government and U.S. taxpayers pay the cost as well. Some employers, who withhold taxes from undocumented workers’ pay but never send this money to the Internal Revenue Service (IRS), cheat both the workers and the government.

When we bring undocumented workers out of the shadows, we upend those lopsided benefits and bring them out into the open so that we all share in the economic growth. Fair wages for legalized workers mean fair competition for all U.S. workers. New skills for legalized workers mean a more productive workforce, which improves opportunities for all workers. The right to work means that law-abiding employers can tap into this hard-working immigrant labor force. Non exploitative pay means that U.S. workers compete for jobs on a level playing field. Above-board earnings mean that tax payments are open, too. The Congressional Budget Office (CBO), considering the costs and benefits of a 2006 bill that included legalization, estimated $65 billion in new income and payroll tax collections over ten years. The CBO also estimated that there would be higher aggregate wages, more reporting of employment income, and lower income taxes for corporations and business people.

Legalization, Families, and Children

For many years, undocumented migration was circular. Workers from Mexico, for example, came to the United States to work for the agricultural season, returned to Mexico in off-months, and repeated the migration the next year. Undocumented immigrants in the United States were typically lone males whose wives and children remained in the home country. One of the consequences of today’s border enforcement — and the high costs and risks associated with it — has been that migrants remain permanently in the United States, and their families join them here. There are more undocumented women and children, and many more U.S.-born U.S. citizen children with undocumented parents then there ever has been before.

Legalization would immediately improve the lives of the 5.5 million children under the age of 18 who live in undocumented households.

The fact today’s undocumented residents live with their families means a new legalization program would have a profound impact on family life and opportunities. First, legalization eliminates the tragedy of families split up by enforcement which result in the detention or deportation of only one family member.

Second, legalization allows undocumented children to become students with a future who can attend college under the same rules as other children. The “DREAM Act” — which would allow undocumented kids who were brought to the United States by their parents to legalize their status and go to college — must be part of comprehensive immigration reform. Third, U.S. born children of undocumented immigrants would not have to fear for their parents’ deportation and then have to choose between family and country.

Legalization would immediately improve the lives of the 5.5 million children under the age of 18 who live in undocumented households — 1.5 million of whom are undocumented, and one million of whom live in households where every other member of the family is also undocumented.10 These children live in fear of their families being broken up, and face a very difficult path to educate themselves. Without the “DREAM Act,” they are unlikely to acquire a college education no matter how academically qualified they may be. Half a million undocumented children have U.S.-born siblings. With legalization, they would not have to labor illegally while their U.S.-born siblings are free to attend college and seek out good jobs. Legalized children could invest in themselves. Legalized parents could invest more in their U.S. born children as well.

These children would not have to worry about their parents being deported and would benefit from their parents’ higher earnings.

In fact, with an immediate impact on 5.5 million children and their families, legalization would be the cheapest federal workforce development and anti-poverty program for children in history. Legalized children and their families would learn more, earn more, and contribute more to this country.

Legalization’s Widespread Geographic Impact

In the past, thinking about undocumented immigrants meant picturing Los Angeles, with its multilingual and multicultural population, service jobs, and proximity to the southern border. Undocumented immigrants were geographically concentrated — almost 10% of all IRCA legalization applicants lived in just 11 zip codes in Los Angeles, while nearly 87% resided in only four states — California, Texas, Illinois, and New York.11 IRCA’s legalization, like undocumented migration at the time, directly affected only a small part of the United States.

Before IRCA, enforcement efforts concentrated on the border. Undocumented immigrants working in the cities were relatively free from enforcement efforts. Immigrants boosted these economies in large and small ways. During the five years before IRCA, for example, the unemployment rate in Los Angeles was lower than that of other cities of its size that did not have much undocumented immigration.

Legalization, too, provided gains to these community economies. After legalization, successful, newly legalized workers — like Hugo Ortega, who went from busboy to the owner of one of the top restaurants in Houston — added to, complemented, and hired U.S. workers in their communities.

Undocumented immigrants are now integral to the economies of states that have not traditionally benefitted from immigration.

Undocumented immigrants are now dispersed throughout the country — living and working in new urban and rural areas. Many states with no previous history of undocumented immigration are now home to undocumented workers. In 2008, the top four states (California, Texas, Illinois, and New York) accounted for only half of all undocumented immigrants, while the top ten states — which now included Georgia, North Carolina, and Virginia — accounted for less than three-quarters. Undocumented immigrants are now integral to the economies of states that have not traditionally benefitted from immigration — like Kentucky, Tennessee, and Iowa.

Small towns far from the border, like Postville, Iowa, illustrate how the economic gains associated with undocumented immigration can turn into harsh costs for both immigrants and native born workers because of enforcement efforts. Postville was a dying town in farm country that was revitalized economically by Agroprocessors, its kosher meat plant, and the plant’s undocumented workers. U.S. workers’ opportunities and local businesses boomed as part of the new and thriving community. But U.S. Immigration and Customs Enforcement (ICE) raided Agroprocessors in 2008, its workers were mostly jailed or deported, and the company eventually declared bankruptcy. Postville’s booming multinational economy disappeared, Midwestern livestock suppliers lost a major customer, Postville’s population shrank to half its pre-raid size, and downtown businesses are boarded and closed.

Legalization is good for U.S. workers; raids are not. Raids damage the local economies. A legalization program would have consolidated the economic gains in Postville, not destroyed them. Further, the ripple effects of legalization can help revitalize our nations’ smaller cities and towns during both good and bad economic times. Workers free to report income, buy houses, and participate in local politics will keep our small towns economically and civically vital.

Legalization helps build strong communities. Local immigration enforcement weakens communities.

Morristown, New Jersey, a town of less than 19,000 people, recently learned its police force was approved for the 287(g) program, which allows local police to act as immigration officers. Community members including legal residents now fear the police and think the program will hurt the local economy because “immigrants will not want to launch a business in a town where they feel discriminated against.” Community safety will surely be harmed as well. One resident says, “How are we going to have a safe community if people are afraid to call the police?” Big city police have seen the deleterious effects of immigration enforcement and have urged Congress to improve public safety by bringing undocumented immigrants out of the shadows. They know local officers acting as immigration enforcement agents make cooperation with the police dangerous and turn the idea of community policing on its head.

CONCLUSION

Legalization worked in the past and it will work today. Legalization for otherwise law abiding undocumented immigrants is humane for them and their families, develops a better workforce for U.S. companies, and acts as a workforce development program for young people. Legalization would also create a level playing field and fair competition for U.S. workers, improve the earnings of law-abiding companies, increase the tax revenue of local, state, and federal governments, and free local police to return to crime prevention, crime solving, and building safe communities. There are few federal policies whose beneficial effects would be felt this widely. Our values demand comprehensive immigration reform and our economy is counting on it.

Earned Legalization: Repairing our Broken Immigration System

WASHINGTON (American Immigration Council) November 5, 2009 ― In “Breaking Down the Problems, What’s Wrong with Our Immigration System?” the Immigration Policy Center laid out key structural problems within immigration law, as well as the inadequate, enforcement-only responses that have given rise to our current immigration crisis. Genuine immigration reform requires a thoughtful, coordinated approach that restores balance to the process, giving America the tools it needs to remain a leader in a rapidly changing world.

We can expect every major piece of comprehensive reform legislation to tackle the issue of creating a legal status for the 11- 12 million undocumented immigrants residing in the United States. Ultimately, most politicians and policy makers agree that practically, the U.S. cannot deport this population, and some kind of process for legalizing status is necessary. However, there remains a temptation to create high penalties in exchange for a green card because many politicians want to ensure that people have paid the price for coming to the country illegally. An overly punitive process, however, ultimately defeats the purpose of a legalization program because it will deter people from participating and potentially drive people further underground. A successful legalization program combines measured penalties with clear and achievable goals that will get the maximum number of people into the system, identify the relatively few who do not belong here based on criminal activity, and integrate those who can contribute their talents as quickly as possible.

Legalization, when accompanied by comprehensive immigration reform, is beneficial to the nation.

Taking care to get legalization right will pay off in a host of ways. If done correctly, legalization offers the following benefits:

It is part of the solution to ending illegal immigration as we know it, which allows federal, state, and local governments to focus scarce resources on other issues.

It benefits the economy by transforming undocumented immigrants into legal workers, thereby leveling the playing field for all U.S. workers and employers.

It is critical to fully integrating immigrants into our communities.

It enables legalized workers to better invest in their education and future and become professionals, homeowners, taxpayers, consumers, and entrepreneurs.

It promotes national security and public safety by allowing DHS and the police to focus resources on threats to U.S. communities’ safety and security.

The following key principles should be considered when devising a structure:

Cover the maximum number of people possible. Covering as many of the 12 million undocumented immigrants as possible makes sense from a humanitarian perspective; it also makes sense from a good government perspective. If one of the objectives of legalization is to minimize illegal immigration, any program that leaves a sizeable undocumented population in the U.S. will fail. Step one toward broad legalization is setting the eligibility cut off date (the date by which the qualifying immigrant had to have been in the U.S.) as close to the date of enactment as possible so the majority of the current undocumented population will be eligible.

Create a simple and straightforward process that measures prospective, rather than retrospective, eligibility. A straightforward registration program without overly onerous, politically motivated initial requirements will maximize the likelihood of success. Once a law has been enacted, the priority is moving quickly, getting people into the system, and minimizing fraud. Creating overly burdensome documentation requirements will require more time to gather, review, and adjudicate. Similarly, attempting to make people pay huge fines or criminal penalties up front will only slow down the process. Basic proof of identity and a criminal background check should be enough to bring an applicant into the system, with more rigorous requirements tied to later stages in the program.

Make the program about integration into the community and a commitment to becoming a lawful permanent resident. Upon registration, applicants should be a on a path that leads to a green card, provided they meet specified criteria. The criteria that most seem to measure commitment — paying taxes, learning English, working hard or going to school, staying out of trouble — can be built into the requirements for successful completion of the program, but the trade off must be legal status that can eventually lead to citizenship. Without the promise of a green card, legalization is nothing more than an expanded temporary worker program, running the risk of creating a second-class citizen with the right to work, but with no incentives to put down roots and no opportunity to remain lawfully. Newly legalized immigrants must not be granted a distinctive status that singles them out from other legal immigrants, inviting discrimination and abuse.

Minimize the impulse to punish people. There is likely to be considerable political pressure to impose high fines, require people to leave the country before applying, limit the ability to bring in immediate family, or complete other requirements in exchange for legal status. While these measures sound tough, they are counterproductive. In order to achieve the broadest possible legalization, the eligibility criteria and evidentiary standards must be achievable by a maximum number of people. History has shown that these types of harsh measures will not shield proposals from charges of “amnesty.” Nothing is gained, but much can be lost, if we succumb to the belief that a punitive legalization process will change the underlying issues.

Coordinate with the groups with close ties to immigrant communities. In order to be successful, the government will need to partner with community-based organizations who know immigrant communities best. These groups will be critical to outreach, education, and application preparation and must receive funding in order to increase their capacity to implement legalization. It will be critical to inform the immigrant community about the program, eligibility standards, and application requirements. Outreach and education must be done in partnership with community-based organizations and must be done in multiple languages.

Make fees and fines count. Although USCIS is fee-funded, implementing a large legalization program will require an up-front investment in the agency prior to the first applications being filed. Congress must also balance the need for funding the program with the desire to keep costs reasonable to ensure maximum participation. While application processing fees and monetary penalties are certain to be included, it is important to develop an affordable cost structure that encourages individuals to come forward rather than deterring participation. In many past proposals, applicants have been able to pay any fines in increments and those monies have been used, in part, to help support state and local initiatives that help people meet their eligibility requirements. Thinking carefully about how to structure any payments requires working with affected communities and the government to maximize the use of limited financial resources.

Don’t create Catch-22s. In order to achieve the broad goals of legalization and ensure that the maximum number of people will be legalized, it is important that immigrants not be ineligible because they are undocumented. For example, many unauthorized immigrants have used false documents and worked without authorization. Violation of the law for the purpose of remaining in the U.S. illegally cannot make an individual ineligible for legalization. Applicants for legalization must not fear that coming forward will result in their deportation or any other penalty. Applicants must feel confident that evidence provided as part of the legalization program will not be used for immigration enforcement purposes, except in the case of egregious violations of the law. Any potential negative consequences of applying for legalization must be made clear through community outreach and education.

Building upon existing laws and proposals that make sense. A legalization program does not have to be built from scratch. Many of the basic components can be found in legislation introduced over the last decade. Other more specialized programs, such as AgJobs and the DREAM Act, are popular legislative proposals that can address the needs of special communities.